An additional 6% tax added to the 9% sales tax already paid results in what the Evanston Code terms a 15% sales tax “for the privilege of purchasing alcoholic liquor” in Evanston, the Administration and Public Works Committee was told by Johanna Nyden, the City’s Economic Development Manager, on Oct. 27.
Alderman Don Wilson, 4th Ward, who said he was speaking “as a resident and consumer” and not just as an alderman, said the City was “no longer in the business of punishing alcohol” and should revisit the 6% tax.
Skokie and Wilmette have no additional tax on liquor, said Ald. Wilson, a fact confirmed by the staff report and presentation. Referencing Evanston’s small wine shops, he said, “This kind of a tax, when your neighbors have no tax, must be crushing.” Arguing that the City should do everything it can to keep shops like the Wine Goddess on Main Street, he said “these are the kind of businesses that give us pizzazz. What if we decided to tax guitars?”
Alvin Price, who owns and leases retail and commercial property along Main Street, said when he enters a boutique wine shop, he immediately notices “the impact of the alcohol sales tax. Do you want these kinds of businesses to disappear from the cultural fabric of Evanston?” he asked.
Diana Hamann, owner of the Wine Goddess shop on Main Street, said, “I can’t tell you how many conversations I’ve had with customers [about the tax], and they never go well.” When a customer looks at a receipt, the 15% sticks out compared to other purchases and other communities, she said. Of 50 nearby communities she contacted, “Evanston is just leaps and bounds ahead of everyone.” Ms. Hamann said eventually she stopped showing the additional tax on sales receipts and instead paid it out of her own pockets.
“Truly, madly, deeply,” she said, “nobody’s getting rich here in the retail realm.” She represented that the 6% sales tax resulted in a 17% reduction in her actual profit because she could not mark up the price of a bottle of wine enough to cover the added tax and keep her customers.
Alderman Coleen Burrus, 9th Ward, asked, “Why not raise the cost” of each bottle of wine to cover the tax.
Because Binny’s, a discount liquor store is “just down the street” in Skokie, said Ms. Hamann.
“But 98% of consumers know they pay tax on top of retail,” said Ald. Burrus. “This just doesn’t make a lot of sense to me.”
Mayor Elizabeth Tisdahl, who also serves as the City’s liquor commissioner, said, “Citizens have not come to me to complain about the tax. Small retailers have.”
Restaurants have made it clear to Mayor Tisdahl, she said, that they do not want a food and beverage tax. A food and beverage tax is an alternative under which restaurants and not retailers pay a tax on the privilege of serving diners in Evanston. No such tax has been officially proposed.
Of the $2.5 million that the City raises from the liquor tax each year, said Mr. Price, about “$60,000 to $90,000” of it comes from small retailers. The rest comes from restaurants, grocery stores, and other retailers like Cost Plus World Market that sell alcoholic beverages.
The Committee eventually referred the matter back to the Liquor Commission for further discussion despite the fact that Mayor Tisdahl said the Commission has already studied the issue. No one, other than Ald. Wilson, appeared inclined to change the liquor tax and find a replacement for the resulting revenue hit.